Opinion

How Air New Zealand's new boss changed Australia's supermarket landscape

Greg Foran has certainly been one of Australia’s most successful exports. He is among only a small handful of executives who have made it big in the US market - both as the head of Walmart’s US operations and the person credited with leading the company’s revival.

That chapter of Foran’s career is about to close as he is set to return to his native New Zealand to take on that country’s highest-profile corporate job - the head of Air New Zealand.

Greg Foran destined for Air New Zealand seat 1ACredit:Jim Rice

But the trajectory or at least the shape of Foran’s career could have been very different.

It was eight years ago in 2011 when the board of Australia’s largest retailer, Woolworths, was faced with a crucial decision. The departure of its then chief executive Mike Luscombe left directors with a choice of two internal candidates to replace him.

Advertisement

Loading

For those outside the inner sanctum, the money was on Foran. He ran its largest division - supermarkets - and was highly regarded.

The other contender was Grant O’Brien who, as chief operating officer of food and petrol, reported to Foran.

The backdrop of the times is vital to understanding the gravity of the decision the board needed to make.

Having spoken to people close to the situation, I have been told the pitches delivered by O’Brien and Foran were very different.

Both understood that Woolworths’ arch-rival Coles, which two years earlier had been acquired by Perth conglomerate Wesfarmers, had begun to nip at its heels. From a clapped out also-ran supermarket chain Coles had begun heavily discounting prices, was gaining sales momentum and fast becoming a real contender and a threat to Woolworths.

Grant O’Brien held the top job at Woolworths for four years and his resignation was made in the months following a disappointing half-year December result and mounting losses from Masters.Credit:Christopher Pearce

The story goes that Foran’s pitch for the top job included an argument that Woolworths would need to invest in re-basing its prices to regain its momentum and that this would involve a large one-off hit to profits.

O’Brien apparently told the board that Woolworths’ momentum could be restored without a profit hit. This was a plan the board found compelling.

History has made its verdict on O’Brien’s strategy.

O’Brien was CEO when Woolworths’ sales and market share were seriously challenged by Coles. He was the architect of its disastrous plan to open the Masters chain of home improvement stores. This decision ultimately burned through $2 billion of Woolworths' capital and the division racked up more than $600 million of losses.

Foran, whose thoughts on Masters have never been made public, ultimately left Woolworths in the months following his unsuccessful bid for the top job.

O’Brien held the top job for four years and his resignation was made in the months following a disappointing half-year December result and mounting losses from Masters.

In early 2016 O’Brien was replaced by Brad Banducci who ultimately pursued a similar strategy to the one Foran had proposed five years earlier. Its success has been increasingly evident since. Woolworths recaptured market share and with one exception has beaten Coles on sales growth since the first quarter of 2017.

Foran initially took a senior role in Walmart’s China operations to earn his stripes. And after a few years was elevated to running its US businesses - a job that earned him $US13.4 million ($20 million) in 2019.

Loading

In the US he has been credited as being responsible for three straight years of increases in quarterly same-store sales at Walmart.

Reports out of the US say that when Foran arrived at Walmart the company was under threat from competitors such as Aldi and Dollar General whose prices were lower.

Interestingly Foran applied the same strategy to Walmart that he had proposed to the Woolworths board a few years earlier. He cleaned up the stores, improved product availability and invested billions in cutting prices.

His unexpected departure from Walmart, however, has raised eyebrows. It was announced amid recent well-publicised tension between Foran and Walmart’s e-commerce chief Marc Lore.

But most believe Foran’s decision to move to New Zealand was more about moving back home.

(His son Kieran Foran is a rugby league player who represented New Zealand).

But this career move will take him from a big fish in a big pond to a huge fish in a tiny pond.

Correction: An earlier version of this story incorrectly stated that Kieran Foran was a former rugby league player. Foran currently plays as a five-eighth and halfback for the Canterbury-Bankstown Bulldogs.